As the number of consumers struggling with debt continues to grow, institutions need collections strategies that treat customers fairly, deliver the best business outcomes and minimise operational costs. What’s more, treating customers fairly across all interactions is a key requirement of the Treating Customers Fairly FCA regulations.
The data sharing imperative
Building the fairest, most effective debt collections strategy is a major challenge as most institutions have only a limited, account-level view of their customers and their financial situations. This means there’s no way to understand if your customers have debts with other creditors, whether they are repaying them, or if they have existing relationships with particular debt collection agencies (DCAs) or debt advisors.
To build smarter collection strategies, your business needs access to data from multiple sources, including credit reference agencies, DCAs and third-party debt advisors and managers (3PDMs). Only by bringing all this together and adopting a ‘data-sharing’ approach can you achieve a holistic view of your customers’ financial situations and support them effectively through their journey to financial rehabilitation.
A better experience for all
By combining your internal records with data from other industry partners, you not only can ensure that your customers are treated fairly throughout the collection process, but customer debts can be managed where there is an existing paying relationship with a DCA or 3PDM company, which means they have a single point of contact for all their repayments. As well as helping towards regulations, you can help to reduce stress for your customers and improve their overall service experience.
Taking customers’ needs into consideration also helps you build stronger, more mutually beneficial relationships, this may also go a long way to maintain your brand and reputation.
Optimising your collections strategy
Furthermore, data sharing helps you focus on the customers who are most likely to repay their debts based on their willingness to repay their other creditors and their existing DCA relationships. This increases the value of debt you are looking to sell on, which also supports more favourable negotiations with DCAs when it comes to setting commissions.
By placing debt with DCAs or 3PDMs that have existing relationships with customers, you can also improve your collection success rates, lower litigation costs and recover debts much more quickly. This all contributes to an optimised collection strategy and helps you achieve significant commercial benefits over time.
Verifying and enriching your customer information
Data sharing also helps you verify customer information – such as whether they have an IVA or debt management plan – before putting collection strategies in place, which is a key requirement for regulatory compliance. For the first time, you can reference and check customer information from your internal systems against records from DCAs and other organisations before the collection process begins. In addition, it may also be possible to enrich your customer data with mobile phone numbers or other contact information from industry partners, helping you have more effective, personalised conversations with your customers.
Building smarter collections strategies together
We believe that the only way to meet the collections needs of customers, institutions and regulators is to create a continuous data sharing loop, which is the philosophy underpinning Experian Collections Bureau (ECB). Through ECB, Experian can help you to create more efficient, compliant collection strategies that benefit your business, your collection partners and most importantly – your customers.